It is not a secret that PLM has strong roots in engineering. PLM was born as an extension of CAD and engineering business. Expanding from CAD, PDM and engineering was a very logical approach, but it created high level dependencies between PLM and engineering disciplines. Some of you might disagree, but most of companies in PLM business for the last two decades ended up in the hands of engineering domain. Design software was core business and PLM was just part of the portfolio.
Outside of vendors’ portfolios, PLM was defined as a business approach with high level focus on business process transformation in a company. Processes, work organization, business goals. collaboration, new product development… you name it. An entire PLM stack was purely focused on how to improve work of people and optimize processes. As much as I like it, for many reasons I can see it as a very problematic approach. Here is why…
For a long period of time. PLM weakness is a complete disconnect of PLM from direct revenue streams. It is engineering productivity tools. It is R&D budget. It has no direct impact on revenue – only saving. Some people suggested to use a “running business” approach to justify PLM cost. And the cost is high. In both models (engineering and business process transformation) PLM systems aren’t involved much in the revenue generation stream. PLM is defined “time and money” saving. But it very hard to quantify. And this is a problem. Because when it comes to decision point about future improvement of PLM systems, the best way to be is the place when money is coming to the company. Therefore if you’re not earning money, but only saving money, this is a really bad news for PLM budget.
Recent news of about Dassault Systemes buying U.S. based ERP vendor- IQMS caught my attention, since this is a rare case of CAD / PLM reposition. According to DS, the main driver of the acquisition is DS platform transformation into business platform. Nice marketing words, but what does it actually mean?
Engineering.com article published interview with Bernard Charles of DS about IQMS acquisition. Read it here. My favorite passage is this one:
Bernard Charles has long declared that the aim of the 3DEXPERIENCE platform is to turn it into a business platform, rather than merely remaining in the product development and manufacturing tracks. The acquisition of IQMS is a big step forward—partly to expand 3DEXPERIENCE’s capabilities, and partly to make 3DEXPERIENCE more attractive for the smaller, SOLIDWORKS user companies as they move towards a digitization and cloud future.Bernard wants these companies on the 3DEXPERIENCE platform; however, the SOLIDWORKS community has generally been resistant to make that move.
One thing that makes this purchase particularly interesting is that it is a PLM developer stretching its “tentacles” towards the ERP side. While there are exceptions like Aras’ acquisition of Impresa MRO (a maintenance solution), usually it is the ERP players who develop or buy PLM capabilities to adapt their manufacturing-related abilities to PLM systems. IFS is a good example with its Application suite, as are companies such as Oracle, who bought Agile PLM; SAP, who bought Right Hemisphere; and Infor, who integrated a version of Aras PLM’s Innovator in their business system.
I found PLM stretch towards ERP interesting. It comes as opposite of many years divide between PLM as innovation and ERP and business execution system. Dassault Systemes demonstrates move from business execution separation into integration and augmentation of business functions. There are few interesting outcomes in my view as a result of this move. It created a new competitive balance in the market. ERP functions can become a differentiator for DS and it will demand changes in traditional PLM position. ERP business functions can be a competitive advantages in SOLIDWORKS channel and it will generate demand for similar functions from other CAD/PLM vendors. End-to-end business integration will drive a new value proposition of DS portfolio especially for mid-market companies. These companies are traditionally afraid of 2 systems – PLM and ERP. Will they buy new 3DX bundle of SOLIDWORKS and IQMS?
What is my conclusion? Stretch towards ERP can be a big change in PLM industry. Especially when it will come to a business of small manufacturing companies traditionally not capable to acquire multiple systems – PDM, PLM, ERP. The demand of these businesses to have an integrated products and ERP functions are missing part in PLM systems. How IQMS functions will be integrated into 3DX platform? This is a great question I don’t know answer yet. But Dassault let genie to get out of the bottle and this move is unstoppable. It is OK now to have ERP functions in PLM business. Even more… PLM companies will want more of such functions now. Just my thoughts…
Best, Oleg
Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased
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